Is the trend still our friend on GBP/AUD?
I’m seeing a major correction taking place on a channel visible on the daily time frame.
Take a look at these nearby Fibonacci retracement levels.
GBP/AUD Daily Forex Chart by TradingView
This sterling pair has been cruising north with its higher lows and higher highs connected by an ascending trend channel that’s been holding since August last year.
Price just tested the channel resistance and is retreating, possibly gearing up for a correction to the Fibs marked on the chart above.
Will any of these hold as support?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your homework on the British pound and Australian dollar, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The 38.2% Fib is close by and is around the mid-channel area of interest, which could be enough to attract some bullish pressure. A larger correction could reach the 61.8% Fib near the pivot point level (2.0070) or the channel support around S1 (1.9830) and 100 SMA, which could be the line in the sand for an uptrend pullback.
If any of these are able to keep losses in check, look out for a continuation of the trend back to the swing high close to R1 (2.0500) or to the channel top around R2 (2.0740).
Note that the 100 SMA is above the 200 SMA to suggest that the path of least resistance is to the upside, but a break below the channel bottom could still send GBP/AUD tumbling down to the bearish targets at S2 (1.9400) then S3 (1.9160).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment!
